Contrary to the myths some building societies would have us believe,
the recent credit crunch has shown that the board of directors of a small minority of building societies have also
not been as financially cautious as they would have us believe they were and like some of the banks seem
to have got carried away during the credit boom .
Building Societies are owned by the members so to get around the thorny issue of the members
(owners) voting against the proposed mergers they have come up with this little known clause (extract below)
In order to ensure the merger is completed
as quickly as possible it will be facilitated under sections 42B(3)(b) of the Building Societies Act in relation to The Derbyshire
and 94(5)(b) in relation to Nationwide. As a result the merger will proceed on the basis of Board resolutions of the Derbyshire
and Nationwide Boards, rather than by member vote. The Societies’ Boards believe it is in the interests of their members
that the merger completes as quickly as possible to avoid a period of prolonged uncertainty.
The finally irony is that the Cheshire board of directors
now believe that a merger with no financial windfall for the members was the right thing to do but in 2006 it leaked
out that "Cheshire Building Society had turned down a take-over approach that could have resulted in windfall payments
of about £650 to members and charities. Portman Building Society, the third largest after Nationwide and Britannia,
made a bid last year that potentially valued the Cheshire at up to £300m. Jason Gaunt, the Cheshire marketing director,
said "The offer was unsolicited. We considered the approach and the board's considered view was that it served
no useful purpose. It is best for our members to continue as a mutual."
So 3 years later the board of directors would have appeared
to cost the Cheshire members a substantial amount of money. So it is not just banks that are good in these current times at
destroying shareholders/members/owners value. On a positive note though Nationwide does regularly offer a great range of high
interest savings accounts so savers with the Cheshire might well get a better deal.